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On April 2, 2026, President Donald Trump issued a <a href="https://www.whitehouse.gov/presidential-actions/2026/04/adjusting-imports-of-pharmaceuticals-and-pharmaceutical-ingredients-into-the-united-states/" target="_blank" rel="noreferrer noopener">proclamation</a> announcing that the United States will impose on July 31, 2026, a 100% Section 232 tariff on imports of certain pharmaceuticals and associated active pharmaceutical ingredients (&ldquo;APIs&rdquo;).&nbsp;The tariff will operate as a floating rate: where a covered product is also subject to a non-duty-free Most-Favored Nation (&ldquo;MFN&rdquo;) rate, the Section 232 tariff will be reduced so that the cumulative duty equals 100%; if the applicable MFN rate exceeds 100%, then only the MFN rate will apply.&nbsp;This action was taken pursuant to Section 232 of the Trade Expansion Act of 1962, which authorizes the president to adjust duties on goods imported in quantities or under circumstances that threaten U.S. national security following an affirmative finding from a Department of Commerce investigation.
The specific pharmaceuticals and APIs covered by the proclamation are identified in <a href="https://www.whitehouse.gov/wp-content/uploads/2026/04/Pharmaceuticals-Imports-ANNEXES-I-II-III-IV.pdf" target="_blank" rel="noreferrer noopener">Annex I of the proclamation</a>.&nbsp;Generic pharmaceuticals and their associated ingredients, including biosimilar products, are not subject to the tariff.&nbsp;Other product categories outside the scope of the new tariff include:
<ul class="wp-block-list">
<li>Drugs and associated ingredients designated as orphan under the Orphan Drug Act;</li>
<li>Nuclear medicines;</li>
<li>Plasma derived therapies;</li>
<li>Fertility treatments;</li>
<li>Cell and gene therapies;</li>
<li>Antibody drug conjugates;</li>
<li>Medical countermeasures related to chemical, biological, radiological, and nuclear threats;</li>
<li>Other specialty pharmaceutical products to be identified by the Department of Commerce; and</li>
<li>Pharmaceutical products for animal health.</li>
</ul>
The proclamation has notable carve-outs:
<ul class="wp-block-list">
<li>&ldquo;[C]ompanies that have, or that the Secretary [of Commerce] assesses are likely soon to have (e.g., based on agreements in principle), onshoring plans approved&rdquo; for covered pharmaceuticals and APIs will be subject to a reduced 20% Section 232 tariff starting September 29, 2026, which will increase to 100% on April 2, 2030;</li>
<li>Companies that have entered into MFN pharmaceutical pricing agreements (or &ldquo;are likely to be eligible soon (e.g., because they have agreements in principle with the Secretary [of Commerce] and the Secretary of Health and Human Services)&rdquo; will be subject to a 0% Section 232 tariff starting September 29, 2026, through January 20, 2029.</li>
<li>Patented pharmaceuticals and APIs from the United Kingdom will be subject to a 10% Section 232 tariff, while comparable products from the European Union, Liechtenstein, Japan, South Korea, and Switzerland will face a 15% rate, consistent with pharmaceutical-related commitments in existing trade deals.</li>
</ul>
The Department of Commerce initiated its underlying investigation in April 2025 (see <a href="https://www.thompsonhinesmartrade.com/2025/04/commerce-initiates-section-232-national-security-investigation-of-imports-of-pharmaceuticals-and-pharmaceutical-ingredients/">Update of April 15, 2025</a>) and, according to the proclamation, transmitted its final report to the President &ldquo;recently.&rdquo; While that report has not been made public, the proclamation summarizes the Department of Commerce&rsquo;s conclusions, stating the Department &ldquo;found that patented pharmaceuticals and associated pharmaceutical ingredients are essential to the United States&rsquo; military and civilian healthcare,&rdquo; but of the most innovative pharmaceuticals (those that are typically patented and branded, as compared to generic pharmaceuticals or pharmaceuticals approved by the U.S. Food and Drug Administration), &ldquo;approximately 53 percent of patented pharmaceutical products distributed domestically are produced outside the country,&rdquo; while &ldquo;only 15 percent of patented APIs by volume [are] domestically produced,&rdquo; leaving the country heavily dependent on foreign sources.
To mitigate the national security risks associated with this reliance, the proclamation directs the Secretary of Commerce and Secretary of Health and Human Services to negotiate agreements aimed at onshoring pharmaceutical and API production.&nbsp;Depending on the outcome of these negotiations, the President may revise the Section 232 tariff rates or adjust the scope of covered products.&nbsp;Accordingly, a joint status report is due to the President within 90 days&mdash;by July 1, 2026.

core/freeform

SmarTrade

Associate

Aaron C. Mandelbaum

Partner

David M. Schwartz

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

International Trade

President Trump Announces Section 232 Tariffs on Pharmaceuticals and Active Pharmaceutical Ingredients